Asia Gold Corp.

Asia Gold Corp.

August 19, 2005 16:45 ET

Asia Gold Signs Letter of Intent to Option Four Copper and Gold Projects in the Gobi Region of Mongolia

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 19, 2005) - David C. Owens, President of Asia Gold Corp. (TSX VENTURE:ASG), is pleased to announce the signing of a Letter of Intent to option the Toste T-1, Tsakhir, Nurag Uul and Bor Khairkhan projects from Solomon Resources Limited (TSX VENTURE:SRB) in the Gobi region of southern Mongolia. The four projects comprise nine Mineral Exploration and Mining licenses covering 31,258 hectares and are strongly prospective for porphyry copper-gold and epithermal gold mineralization. The projects are subject to an underlying option agreement between Solomon and Gallant Minerals Ltd.

The Letter of Intent

Pursuant to the Letter of Intent, Solomon has agreed to grant Asia Gold the right to earn up to a 70% interest in the four projects subject to the execution of a definitive Option Agreement by no later than August 31, 2005. The closing of the Option Agreement is subject to due diligence by Asia Gold, completion of a definitive agreement and the approval by the TSX Venture Exchange, the respective Board of Directors of each company and Gallant. Upon signing the Option Agreement, Asia Gold has agreed to pay Solomon US$50,000 cash and 100,000 Asia Gold common shares.

The option to earn a 70% interest in the four projects is to be exercised in two stages. The exercise of the first stage will earn Asia Gold a 55% interest in all of the projects. The second stage, which is exercisable on a project by project basis, will earn Asia Gold a further 15% interest, for an aggregate 70% interest.

To exercise the Stage 1 option Asia Gold must pay Solomon an aggregate of US$325,000, issue to Solomon common shares of Asia Gold valued at US$600,000 and fund and carry out US$1.8 million of exploration within three years from the execution date of the Option Agreement. As part of the annual work commitment, Asia Gold is also responsible for the payment of all license fees.

The schedule of payments and work expenditures is as follows:

Anniversary of Cash Common Work
Definitive Payment Shares Expenditure
1 US$ 75,000 US$ 200,000 US$ 400,000
2 US$ 100,000 US$ 400,000 US$ 600,000
3 US$ 150,000 0 US$ 800,000
Totals US$ 325,000 US$ 600,000 US$ 1,800,000

To exercise the Stage 2 option, Asia Gold must fund and carry out US$2.5 million of exploration on each of the projects which it intends to retain within five years from the execution date of the Option Agreement. Asia Gold also has a first right to acquire an additional 10% interest, for an aggregate 80% interest, should Gallant convert its 20% interest in any project to a net smelter royalty, pursuant to an underlying option agreement between Solomon and Gallant.

In the event that Solomon does not exercise the first stage of the underlying option agreement with Gallant, Asia Gold shall be entitled to the assignment from Solomon to Asia Gold of the underlying Gallant agreement and Solomon shall be entitled to a 10% carried interest in the projects. This interest shall be carried through to the commencement of commercial production on each project.

"The projects optioned from Solomon host significant mineralized systems that have not been fully explored," said Mr. Owens. "Drill-ready targets already have been identified and we now have a timely opportunity to conduct increased exploration of these large and complex systems as part of our US$2.6million exploration program on the company's 25,000-square-kilometre land holdings in the Gobi region."

David C. Owens, a qualified person as defined by National Instrument 43-101, supervised the preparation of the information in this release.

Ivanhoe Mines owns approximately 47% of the issued and outstanding shares of Asia Gold. A further 7.3% of Asia Gold's share capital is held by BHP Billiton, who acquired 1,153,998 units consisting of one common share and one-half of one warrant on July 28, 2005. The common shares and warrants acquired by BHP Billiton are subject to a hold period that expires on November, 28, 2005.

Forward-Looking Statements: Statements in this release that are forward-looking statements, including the planned exploration of the optioned Mongolia properties, are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in the company's periodic filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy or this release.

Contact Information

  • Asia Gold Corp.
    Bill Trenaman
    (604) 688-5755
    Asia Gold Corp.
    Bob Williamson
    (604) 688-5755